EBA reports on benefits and risks of RegTech

The European Banking Authority (EBA) has issued its assessments of the current benefits and risks of the use of regulatory technology (RegTech) solutions in financial services.

The report published by the EBA looks at the application of technology-enabled innovation for regulatory, compliance and reporting requirements and provides analysis into the five most frequently used RegTech segments: Anti Money-Laundering/Countering the Financing of Terrorism (AML/CFT), fraud prevention, prudential reporting, ICT security and creditworthiness assessment.

The deep-dive on RegTech for prudential reporting identified a need for wider use of technology and raising awareness of possible use cases for RegTech in supervisory reporting.

The analysis found that financial institutions who have implemented RegTech highlight enhanced risk management, better monitoring and sampling capabilities, and reduced human errors as the main benefits of use of the technology.

Meanhwile,RegTech providers emphasise the ability to increase efficiency, quell the impact of ongoing regulatory change and improve effectiveness.

The report states: “The evidence suggests that the majority of challenges to RegTech market development are internal factors within financial institutions and RegTech providers.

“These relate to data (quality, security, privacy), interoperability and integration with the existing legacy systems, a lack of financial institutions’ application programming interface (API) capabilities, costly and often lengthy and complex due diligence processes, and limited awareness of RegTech solutions.”

The EBA added that the current legal and regulatory framework has not been identified as the most material obstacle for RegTech adoption. However, it said a lack of common regulatory standards across Member States could pose barriers for wider market adoption of RegTech solutions across the Single Market.

As a result, the EBA proposed the following steps to be taken to support the adoption and scale-up of RegTech solutions:

-activities to deepen knowledge and address any skill gaps among regulators and supervisors on RegTech; support convergence of supervisory practices across the EU in the treatment of RegTech; and provide clarity on supervisory expectations;
-further steps to harmonise the legal and regulatory requirements, where appropriate;
-and, further leverage the role and expertise of the European Forum for Innovation Facilitators (EFIF) and the national regulatory sandboxes and innovation hubs as a safe testing environment for RegTech solutions.

    Share Story:

Recent Stories


The Future of Intelligent Finance
FStech Group Editor Mark Evans sits down with Jason Cao, President of Global Financial Services Business Unit, Enterprise BG at Huawei ahead of its Intelligent Finance Summit which was held on 3rd and 4th of June in Shanghai. This Q&A delves into key trends in digital transformation of the financial services industry as well as a look at how data, robotic infrastructure, intelligent storage and innovative technologies are shaping the future for FSIs.

The Rise of Instant Payments
Instant payments are creating new business opportunities for banks by providing more touchpoints than ever. With these evolutions underway, Featurespace brought leading industry experts together to discuss how they are protecting customers from fraudsters in real time, utilizing innovative and disruptive solutions to reduce fraud. Click here to find out more.

Offloading Cyber Risk in the Cloud
As cyber attacks and data breaches are in the news on an increasingly regular basis - with regulatory penalties and customer trust on the line for financial services firms - it has never been more crucial to be compliant in the cloud.

This video, with Akamai’s EMEA director of security technology and strategy Richard Meeus, will help explain what your company can be doing to make sure it’s not embroiled in the next big fine or front-page scandal.